Global oil demand will rise by about 1.3m barrels a day next year, higher than the previous estimate by Moody’s, as consumption increases in the US, China and Russia, the agency forecast.

But it added that increases in Opec production had negated growing demand, leading to a rapid buildup of oil stocks and that the trend would continue next year with only a limited pickup in prices later. The US’s decision to waive sanctions against Iran if conditions are met could add to global supply and oil will increase by just $5 a barrel in each of 2017 and 2018, Moody’s said.

Terry Marshall, a senior vice-president at Moody’s, said: “Increasing consumption will not match the increase in supply. It will take time for these large global inventories to unwind, and combined with the possibility of new supply coming online from Iran, we expect oil prices to remain lower for a longer period than previously anticipated.”

Moody’s cut its medium-term forecast for Brent crude to $63 a barrel by 2020, a little more than half the $115 reached in summer 2014. It revised its forecasts after oil prices fell below $40 a barrel this month, after Opec stuck by its strategy of pumping more oil to hold on to its share of the market and, it hopes, weaken smaller US producers.

Marshall said: “Opec oil producers continue to produce without restraint as they compete for market share, exacerbating the currently saturated markets. Russia has also greatly increased production, and the possibility that sanctions will be lifted on Iran in 2016 could flood the market with even more supply.”